Foreign buyers of Australian property have been hit with new taxes.
Foreign property buyers in Australia will soon face new taxes, as two of the country’s biggest states look to impose stamp duty charges amid concerns of a flood of Chinese money, and in an effort to push revenues, reported the Financial Times.
Queensland and New South Wales (NSW) will introduce stamp duty charges of three percent and four percent, respectively, on foreign buyers. Starting from next year, NSW will also impose a land tax surcharge of 0.75 percent on real estate investors.
In April, the state of Victoria announced it would increase its stamp duty charges for foreign buyers from three percent to seven percent by July 2016.
“These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” said NSW Treasurer Gladys Berejiklian.
The move is expected to raise over AU$1 billion in NSW and almost AU$100 million in Queensland over a period of four years.
A wave of Chinese investment in overseas property in recent years has resulted into a backlash, with Hong Kong and Singapore introducing new taxes.
In 2014 to 2015, Australia approved AU$24 billion in Chinese property investments, doubling the figure from the previous year. With this, property prices, particularly in Melbourne and Sydney, witnessed a four-year boom that is turning political attention to the dangers of a price bubble and housing affordability.
The Labor Party has promised to slash tax breaks for buy-to-let investors, which it believes creates a barrier for potential first-time buyers, while the Liberal-National coalition claims that tampering with “negative gearing” policies will affect confidence within the housing market, push up rents and dampen property prices.
Meanwhile, property industry lobby groups warned that the new “populist foreign taxes” will only affect supply, while doing nothing to make property more affordable for Australians.
“Let’s call this for what it is — a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage,” said Property Council of Australia’s Chief of Policy, Glenn Byres.